IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: PERKINS & MARIE CALLENDERS, INC.

, et al., Debtors. Chapter 11 Case No. 11-11795-KG (Jointly Administered) Re: Docket No. 1426
Hearing Date: January 19, 2012, at 9:30 a.m. (Eastern)

RESPONSE OF DANIEL M. HUNTER, AS TRUSTEE OF THE DANIEL M. HUNTER REVOCABLE TRUST, TO REORGANIZED DEBTORS EIGHTH (8TH) OMNIBUS (SUBSTANTIVE) OBJECTION TO CLAIMS PURSUANT TO SECTION 502(b) OF THE BANKRUPTCY CODE, BANKRUPTCY RULES 3003 AND 3007 AND LOCAL RULE 3007-1 Daniel M. Hunter, as Trustee of the Daniel M. Hunter Revocable Trust (the Lessor), by and through his undersigned counsel, responds (the Response) to the Reorganized Debtors Eighth (8th) Omnibus (Substantive) Objection to Claims Pursuant to Section 502(b) of the Bankruptcy Code, Bankruptcy Rules 3003 and 3007 and Local Rule 3007-1 (the Objection) and states as follows: I. FACTUAL BACKGROUND 1. On June 13, 2011 (the Petition Date), Perkins & Marie Callenders, Inc.

(Perkins) and certain affiliated entities (collectively, including Perkins, the Debtors) filed voluntary petitions for relief under Chapter 11 of 11 U.S.C. 101 et seq. (the Bankruptcy Code) in the United States Bankruptcy Court for the District of Delaware. 2. On November 1, 2011, the Bankruptcy Court entered the Findings of Fact,

Conclusions of Law, and Order Under Section 1129 of the Bankruptcy Code and Rule 3020 of the Bankruptcy Rules Confirming Debtors Second Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (the Confirmation Order) (D.I. 1287), in which the

US_ACTIVE-108209402.4-TREILEY

Court confirmed the Debtors Plan (as defined in the Confirmation Order). See Confirmation Order at 2, p. 21. A. 3. The Lease On June 29, 2005, CNL Net Lease Funding 2003, LLC (CNL) and The

Restaurant Company d/b/a The Restaurant Company of Delaware (Restaurant Co.)1 signed the Lease Agreement (with any amendments, addenda, schedules and/or other attachments, the Lease). A true and correct copy of the Lease is attached as Exhibit 1. 4. Pursuant to the Lease, Restaurant Co. leased certain property (the Property)

from CNL and initially agreed to pay rent pursuant to a certain Rent Addendum attached to the Lease. See Lease at 2(b), p. 2. 5. The term of the Lease (the Term) ran through June 30, 2025, see Lease at

2(a), p. 2, after which time Restaurant Co. had one ten (10) year option to extend th[e] Lease . . . followed by two (2) successive five (5) year options to extend th[e] Lease (for a total of up to an additional twenty (20) years) . . . . See Lease at 10, p. 10. 1. 6. Insurance Obligations Under the Lease

The Lease obligated Restaurant Co. to obtain insurance with respect to the subject

Property. See Lease at 4, pp. 4-6. For instance, the Lease provided: (b) Tenant,2 at its expense and as additional rent hereunder, shall throughout the term of this Lease and any extension or renewal thereof, keep the Premises insured with (i) Special Form Causes of Loss coverage . . . and, (ii) Ordinance and Law Coverage . . . .

Restaurant Co. is now known as Perkins. Capitalized terms used in this Section I(A) but not defined shall have the meaning ascribed to them in the Lease.

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(c) Tenant shall maintain throughout the term of this Lease and any extension thereof, at its own expense and as additional rent, commercial general liability insurance including product liability and liquor liability (if alcohol is served) covering the Premises . . . . (d) Tenant shall maintain throughout the term of this Lease and any extension thereof, at its own expense, business interruption insurance . . . . See Lease at 4(b)-(d), p. 5. 7. The Lease also provided that Tenant shall maintain such other insurance on or in

connection with the Premises as reasonably required from time to time by Landlord, which is commonly obtained in connection with properties similar to and in the same area as the Premises and which is commercially reasonable . . . . See Lease at 4(g), p. 6. 2. 8. Tax Obligations Under the Lease

The Lease also obligated Restaurant Co. to pay all taxes and assessments in

connection with the Property. Specifically, the Lease provided, in relevant part, as follows: Tenant shall pay prior to delinquency all taxes and assessments which may be levied upon or assessed against the Premises and all taxes and assessments of every kind and nature whatsoever arising in any way from the use, occupancy, possession or transfer of ownership (excluding, however, any documentary stamp or transfer taxes incurred by Landlord (or a successor landlord) in connection with a transfer of ownership) of the Premises or assessed against the improvements situated thereon, together with all taxes levied upon or assessed against Tenants Property. To that end, Landlord shall not be required to pay any taxes or assessments whatsoever which relate to or may be assessed against this Lease, the Rent and other amounts due hereunder, the Premises, improvements and Tenants Property; provided, however, that any taxes or assessments which may be levied or assessed against the Premises for a period ending after the termination hereof shall be prorated between Landlord and Tenant as of such date. . . . See Lease at 7(a), p. 7.

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3. 9.

CNL Assigns the Property and the Lease to the Lessor.

On or about March 26, 2006, CNL assigned to the Lessor (i) its right, title and

interest in and to the Property, and (ii) its right, title and interest as landlord under the Lease. 4. 10. The Lessor Reduces the Rent.

On January 1, 2011, the Lessor agreed to reduce Perkins rent obligations under

the Lease.3 Specifically, the Lessor and Perkins agreed as follows: Landlord and Tenant acknowledge and agree that Annual Rent due and payable under the Lease shall be reduced by twenty-four percent (24%) for a twelve month period commencing January 1, 2011 and terminating on December 31, 2011 (hereinafter referred to as the Second Recovery Period). Annual Rent will continue to be due and payable in advance on the first day of each and every month during the Second Recovery Period in the following amounts: January 1, 2011 - December 31, 2011: Annual Rent payable in monthly installments of Fifteen Thousand Thirty-Five and 67/100 Dollars ($15,035.67) shall be reduced by an amount equal to Three Thousand Five Hundred Eighty-Five and 67/100 Dollars ($3,585.67) each month (Reduced Rent) so that the monthly installments of Base Rent shall equal Eleven Thousand Four Hundred Fifty and No/100 Dollars ($11,450.00). Commencing on January 1, 2012 and continuing through June 30, 2012, Annual Rent will equal One Hundred Eighty-Three Thousand Five Hundred Eighty-Five and 67/100 Dollars ($183,585.67) payable in equal monthly installments of Fifteen Thousand Two Hundred Ninety-Eight and 81/100 Dollars ($15,298.81). On July 1, 2012 and on each one (1) year anniversary of such date thereafter during the Lease Term (and during the first ten (10) year renewal period and the immediately following five (5) year renewal period, if such renewal options are

As the Lessor also had agreed to reduce Perkins rent obligations under the Lease on August 1, 2009, see Lease, First Amendment to Lease, at 1, pp. 1-2, its 2011 agreement represented the second time the Lessor agreed to reduce Perkins rent obligations under the Lease.

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exercised by Tenant), Annual Rent shall be increased by an amount equal to the previous years Annual Rent multiplied by one and three-quarters percent (1.75%). See Lease, Second Amendment to Lease, at 1, p. 2.4 B. 11. The Debtors Reject the Lease. On the Petition Date, the Debtors filed the Motion Pursuant to 11 U.S.C.

105(a), 365(a) and 554(a) for an Order Authorizing the Debtors to (I) Reject Nunc Pro Tunc to the Petition Date Certain Unexpired Non-Residential Real Property Leases Related to Certain Restaurant Locations, and (II) Abandon Any Property That Remains on the Premises Covered by the Leases (the Rejection Motion) (D.I. 15). 12. In the Rejection Motion, the Debtors sought to, inter alia, reject the Lease,

effective as of the Petition Date. See Rejection Motion at 14, p. 6. 13. C. 14. The Court granted the Rejection Motion on July 12, 2011. See D.I. 210. Unpaid Amounts Under the Lease $3,585.67, the rent due to the Lessor on June 1, 2011 (the Prepetition

Arrearage), remained unpaid as of the Petition Date. 15. In addition, the following amounts (collectively, the Annual Rent Claim)

remained due as Annual Rent through the Term of the Lease:

The Lease also provided that: In consideration of the Landlords agreement to further abate Annual Base Rent. Tenant hereby agrees to pay Landlord, as additional rent, a sum equal to the amount, if any, by which six percent (6%) of Gross Sales from business transacted by Tenant in, from or on the Leased Premises during the Second Recovery Period exceeds $1,500,000.00. Such amount shall become due and payable sixty (60) days after the last day of the Second Recovery Period. . . .

Continued on following page

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Period July 1, 2011-December 31, 2011 January 1, 2012-June 30, 2012 July 1, 2012-June 30, 2013 July 1, 2013-June 30, 2014 July 1, 2014-June 30, 2015 July 1, 2015-June 30, 2016 July 1, 2016-June 30, 2017 July 1, 2017-June 30, 2018 July 1, 2018-June 30, 2019 July 1, 2019-June 30, 2020 July 1, 2020-June 30, 2021 July 1, 2021-June 30, 2022 July 1, 2022-June 30, 2023 July 1, 2023-June 30, 2024 July 1, 2024-June 30, 2025 Subtotal: 16.

Pro-rated applicable Annual Rent $21,514.025 $91,792.866 $186,798.427 $190,067.398 $193,393.57 $196,777.96 $200,221.57 $203,725.45 $207,290.65 $210,918.23 $214,609.30 $218,364.96 $222,186.35 $226,074.61 $230,030.92 $2,813,766.26

In addition, the annual insurance obligation on the Property is $2,549.29 and the

annual real property taxes on the Property total $15,503.16. These amounts total $18,052.45 (the Annual Insurance and Tax Obligation). Under the terms of the Lease, Perkins was responsible

Continued from previous page

See Lease, Second Amendment to Lease, at 3(a), p. 2. The Lessors Proof of Claim (as defined below) did not claim any amounts due under this provision.
5

This amount equals six months times the Reduced Rent (as defined in the Lease) of $3,585.67.

This amount equals six times the monthly installments of Annual Rent, as calculated commencing on January 1, 2012 and continuing through June 30, 2012, of $15,298.81. The Annual Rent for the twelve-month period starting July 1, 2012, is calculated under the Lease by increas[ing] the Annual Rent by an amount equal to the previous years Annual Rent multiplied by one and three-quarters percent (1.75%). See Lease, Second Amendment to Lease, at 1, p. 2. In other words, a particular Annual Rent is 101.75% of the previous Annual Rent. The Lease provides that [c]ommencing on January 1, 2012 . . . Annual Rent will equal One Hundred Eighty-Three Thousand Five Hundred Eighty-Five and 67/100 Dollars ($183,585.67). See Lease, Second Amendment to Lease, at 1, p. 2. Accordingly, the Annual Rent for the period from and after July 1, 2012 through and including June 30, 2013 was $186,798.42, or 101.75% of $183,585.67. This and all additional amounts pursuant to the Annual Rent Claim also were calculated at 101.75% of the previously applicable Annual Rent.
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to pay such amounts. See Lease at 4, pp. 4-6 (Perkins responsible for insurance obligations); Lease at 7(a), p. 7 (Perkins responsible for tax obligations). 17. Accordingly, the following amounts (collectively, the Additional Rent Reserved

Claim) remained due on account of the Annual Insurance and Tax Obligation through the Term of the Lease: Period July 1, 2011-December 31, 2011 January 1, 2012-June 30, 2012 July 1, 2012-June 30, 2013 July 1, 2013-June 30, 2014 July 1, 2014-June 30, 2015 July 1, 2015-June 30, 2016 July 1, 2016-June 30, 2017 July 1, 2017-June 30, 2018 July 1, 2018-June 30, 2019 July 1, 2019-June 30, 2020 July 1, 2020-June 30, 2021 July 1, 2021-June 30, 2022 July 1, 2022-June 30, 2023 July 1, 2023-June 30, 2024 July 1, 2024-June 30, 2025 Subtotal: 18. Additional Rent Reserved $9,026.229 $9,026.22 $18,052.45 $18,052.45 $18,052.45 $18,052.45 $18,052.45 $18,052.45 $18,052.45 $18,052.45 $18,052.45 $18,052.45 $18,052.45 $18,052.45 $18,052.45 $252,734.29

The total of the Annual Rent Claim and the Additional Rent Reserved Claim is

$3,066,500.55 (the Total Rent Reserved Claim). D. 19. The Proof of Claim On or about August 9, 2011, the Lessor filed Proof of Claim No. 1100 (the Proof

of Claim). A true and correct copy of the Proof of Claim is attached as Exhibit 2.

This amount, half of the Annual Insurance and Tax Obligation, equals six months payment in connection with insurance and real property taxes on the Property.

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20.

In the Proof of Claim, the Lessor asserted its entitlement to at least $463,560.75

(the Total Claim) as the result of the Debtors rejection of the Lease. Specifically, this amount equals $459,975.08, or 15% of the Total Rent Reserved Claim,10 plus the Prepetition Arrearage ($3,585.67). E. 21. 22. The Objection On December 20, 2011, the Debtors filed the Objection (D.I. 1426). In the Objection, the Debtors alleged that the Proof of Claim, as well as certain

other claims, asserted amounts that are not calculated in accordance with the statutory cap . . . placed on such claims under section 502(b)(6) of the Bankruptcy Code. See Objection at 22, p. 7. 23. The Debtors sought to reduce the Lessors claim from at least $463,560.75 to

$372,786.87. See Objection, Exhibit B, at p. 5. How this amount was calculated was (and remains) unclear, but the Debtors described their Reason for the reduction as follows: Section 502(b)(6) of the Bankruptcy Code limits claims for damages resulting from the rejection of a lease of real property to the rent reserved by the applicable lease, without acceleration, for the greater of (i) one year or (ii) 15% of the remaining term of the applicable lease (but not to exceed three years) from the Petition Date, plus any unpaid rent due under such lease, without acceleration, on the Petition Date. Based on a review of the Debtors books and records, unpaid rent as of the Petition Date is owed to this claimant in the amount of $12,194.25.11 Therefore, pursuant to section 502(b)(6) of the Bankruptcy Code, the Debtors believe that the claim should be capped at $372,786.87.
10

The mechanics of this calculation, as prescribed by Section 502(b)(6)(A) of the Bankruptcy Code, are described infra. In fact, the Proof of Claim sought a Prepetition Arrearage only in the amount of $3,585.67, so a discrepancy with respect to prepetition amounts due and owing does not explain the reduction in the Lessors claim. In the Proof of Claim, the Lessor reserved his right to amend or supplement the Proof of Claim in any manner, including (without limitation) with respect to amount; the Lessor continues to reserve these rights.

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See Objection, Exhibit B, at p. 5. II. SUMMARY OF RESPONSE 24. The Debtors Objection is wholly inadequate because it does not describe the

means by which the Debtors calculated their reduction to the Lessors Total Claim, or provide any evidence sufficient to rebut the prima facie validity of the Lessors timely filed Proof of Claim. 25. In addition, the Lessor can prove the validity of the Total Claim: the Lessors

claim was calculated correctly based on the terms of the Lease and the relevant provisions of the Bankruptcy Code. First, the Lessor calculated the Total Rent Reserved Claim by adding the Annual Rent Claim and the Additional Rent Reserved Claim (which properly included the Annual Insurance and Tax Obligation). The Lessor then appropriately added the Prepetition Arrearage and 15% of the Total Rent Reserved Claim to arrive at the Total Claim. III. RESPONSE A. The Debtors Have Not Overcome the Presumption of Validity With Respect to the Proof of Claim. The Lessor filed the Proof of Claim in accordance with the Bankruptcy Code and

26.

the Federal Rules of Bankruptcy Procedure. Bankruptcy Rule 3001(f) provides that [a] proof of claim executed and filed in accordance with these rules shall constitute prima facie evidence of the validity and amount of the claim. See Fed.R.Bankr.P. 3001(f). Accordingly, the Proof of Claim is prima facie valid. 27. In order to overcome the presumption of validity, the party opposing a claim must

present evidence equal in force to the prima facie case. See In re Allegheny Intl, Inc., 954 F.2d 167, 173-74 (3d Cir. 1992). The evidence presented must be of substance, as [t]he mere denial

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of the validity or amount is not sufficient. In re Glenn, 100 B.R. 763, 766 (Bankr. W.D. Pa. 1989). Moreover, the burden of going forward with the proof is on the objecting [party], not the claimant. In re Lanza, 51 B.R. 125, 127 (Bankr. D. N.J. 1985) (That burden is not satisfied by the mere filing of an objection. (internal quotation marks omitted)). An objection alone is not sufficient to meet this standard, since the objection in and of itself is a mere statement of invalidity and insufficient to contest the prima facie case. In re King Res. Co., 20 B.R. 191, 197 (D. Colo. 1982) (A trustee must document his objection with probative evidence to satisfy his burden of going forward. (emphasis added)). 28. In the Proof of Claim, the Lessor, inter alia, attached a copy of the Lease, quoted

certain relevant provisions and provided detailed calculations. Conversely, in the Objection, the Debtors merely quoted Section 502(b)(6) of the Bankruptcy Code and provided a reduced number (while producing no evidence or alternative calculation, nor even pointing out any alleged deficiencies in the Lessors calculations). It is unclear and completely unstated how the Debtors arrived at their total. 29. The Debtors showing is inadequate and does not rebut the prima facie validity of

the Lessors Proof of Claim. Accordingly, the Objection should be overruled. B. The Lessor Properly Filed a Proof of Claim in the Amount of At Least the Total Claim. In the alternative, and in the event that (notwithstanding the bare-bones Objection

30.

devoid of any substantive explanation) the Court finds that the Debtors have produced evidence equal in force to the prima facie case, the burden then reverts to the claimant to prove the validity of the claim by a preponderance of the evidence. Allegheny Intl, Inc., 954 F.2d at 173. The Lessor can meet the burden because the Total Claim is correctly calculated pursuant to the terms of the Lease and Section 502(b)(6) of the Bankruptcy Code. - 10 -

31.

Section 502(b) of the Bankruptcy Code provides, in relevant part, that: [I]f [an] objection to a claim is made, the court, after notice and a hearing, shall determine the amount of such claim in lawful currency of the United States as of the date of the filing of the petition, and shall allow such claim in such amount, except to the extent that . . . (6) if such claim is the claim of a lessor for damages resulting from the termination of a lease of real property, such claim exceeds (A) the rent reserved by such lease, without acceleration, for the greater of one year, or 15 percent, not to exceed three years, of the remaining term of such lease, following the earlier of (i) the date of the filing of the petition; and (ii) the date on which such lessor repossessed, or the lessee surrendered, the leased property; plus (B) any unpaid rent due under such lease, without acceleration, on the earlier of such dates . . . .

See 11 U.S.C. 502(b). 32. Here, the Lessor (i) properly included in the Total Rent Reserved Claim the

Annual Insurance and Tax Obligation; and then (ii) correctly calculated, pursuant to Section 502(b)(6) of the Bankruptcy Code, the Total Claim, which is equal to the Prepetition Arrearage plus 15% of the Total Rent Reserved Claim. 1. Charges Related to the Annual Insurance and Tax Obligation Properly Were Included in the Lessors Total Rent Reserved Claim.

33.

The Bankruptcy Court for the District of Delaware, as well as other courts within

the Third Circuit, repeatedly have cited with approval a test prescribed by the Bankruptcy

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Appellate Panel for the Ninth Circuit12 relative to what constitutes rent reserved under Section 502(b)(6)(A) of the Bankruptcy Code. See, e.g., In re PPI Enters. (U.S.), Inc., 228 B.R. 339, 348-49 (Bankr. D. Del. 1998); see also In re New Valley Corp., No. Civ.A. 98-982, 2000 WL 1251858, at *9 (D.N.J. Aug. 31, 2000); In re Foamex Intl, Inc., 368 B.R. 383, 391-92 (Bankr. D. Del. 2007); In re Crown Books Corp., 291 B.R. 623, 627 (Bankr. D. Del. 2003); In re Peters, No. 03-11077DWS, 2004 WL 1291125, at *6 n.21 (Bankr. E.D. Pa. May 7, 2004); cf. First Bank Natl Assoc. v. F.D.I.C., 79 F.3d 362, 367 (3d Cir. 1996). Thus, as the PPI Court explained: In McSheridan, the bankruptcy appellate panel adopted a three-part test that must be met for a lease charge to constitute rent reserved under 502(b)(6): 1) The charge must: (a) be designated as rent or additional rent in the lease; or (b) be provided as the tenants/lessees obligation in the lease; 2) The charge must be related to the value of the property or the lease thereon; and 3) [T]he charge must be properly classifiable as rent because it is a fixed, regular or periodic charge. Id. at 349. 34. The first prong of the McSheridan test is met with respect to the Annual Insurance

and Tax Obligation because these charges are to be paid by Perkins under the terms of the Lease. See Lease at 4, pp. 4-6 (insurance obligations);13 Lease at 7(a), p. 7 (tax obligations).

12

See In re McSheridan, 184 B.R. 91, 102 (B.A.P. 9th Cir. 1995), overruled in part on other grounds, In re El Toro Materials Co., 504 F.3d 978, 981-82 (9th Cir. 2007).
13

The Lease even expressly provides that certain of Perkins insurance obligations are additional rent, another possibility contemplated by the McSheridan test. See, e.g., Lease at 4(b), p.5; 4(c), p. 5.

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35.

Courts have found that insurance obligations under a lease are related to the value

of the underlying property, and thus, the second prong of the McSheridan test is met with respect to these charges. See, e.g., In re Roses Stores, Inc., 179 B.R. 789, 790 (Bankr. E.D.N.C. 1995) (Union Central argues that property taxes . . . [and] insurance . . . should also be included in the rent reserved under 502(b)(6). . . . These charges are clearly . . . related to the value of the property and the lease. . . .); In re Farley, Inc., 146 B.R. 739, 746 (Bankr. N.D. Ill. 1992) ([R]ent reserved in a triple net lease, such as the one in this case, includes taxes and insurance premiums-$24,000 and $30,000 respectively.); In re Metals USA, Inc., No. 0142530H411, 2004 WL 771096, at *3 (Bankr. S.D. Tex. Jan. 15, 2004) (Under the McSheridan Test, insurance payments should also be included as part of the rent reserved amount.); cf. In re Andover Togs, Inc., 231 B.R. 521, 541 (Bankr. S.D.N.Y. 1999) (contrasting certain charges with insurance or real estate taxes which courts have determined to constitute rent reserved, finding that they have a relationship to the value of the property and the value of the lease thereon). 36. Similarly, courts have found that tax obligations under a lease are related to the

value of the underlying property, and thus, the second prong of the McSheridan test is met with respect to these charges, as well. See Metals USA, Inc., 2004 WL 771096, at *3 (Real estate taxes are related to the value of a particular property and are payable on a periodic basis. Under the McSheridan Test and the terms of the Lease, the real estate taxes in this case should be included as part of the rent reserved amount.); see also Roses Stores, Inc., 179 B.R. at 790; Farley, Inc., 146 B.R. at 746; Andover Togs, Inc., 231 B.R. at 541. 37. The third prong of the McSheridan test also is met with respect to Annual

Insurance and Tax Obligation because it is a fixed, regular or periodic charge, equal to the sum of $2,549.29 and $15,503.16 on account of insurance and taxes, respectively.

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38.

Accordingly, the Total Rent Reserved Claim properly included amounts relative

to the Annual Insurance and Tax Obligation, which obligation totals among the rent reserved, as calculated under Section 502(b)(6) of the Bankruptcy Code. See PPI, 228 B.R. at 348-49. 2. 39. The Lessor Correctly Calculated the Total Claim.

The Lessor correctly calculated the Total Claim of at least $463,560.75 under the

relevant provisions of the Bankruptcy Code. 40. Section 502(b)(6) of the Bankruptcy Code provides that the Lessors claim equals

the rent reserved by [the] [L]ease, without acceleration, for the greater of one year, or 15 percent, not to exceed three years, of the remaining [T]erm, plus any unpaid rent due under such lease.14 See 11 U.S.C. 502(b)(6). 41. The unpaid rent due under such lease under Section 502(b)(6)(B) of the

Bankruptcy Code is equal to the Prepetition Arrearage. 42. With respect to the rent reserved . . . for the greater of one year, or 15 percent,

not to exceed three years, under Section 502(b)(6)(A) of the Bankruptcy Code, the District Court for the District of New Jersey has explained that the majority of courts interpreting this section have concluded that the 15% cap must be calculated with reference to the total amount of the rent remaining due, as opposed to the total amount of time remaining under the lease. New Valley Corp., 2000 WL 1251858, at *11 (quoting In re Todays Woman of Florida, Inc., 195 B.R. 506, 507 (Bankr. M.D. Fla. 1996)); see also Andover Togs, Inc., 231 B.R. at 547

Section 502(b)(6) provides that each such amount is calculated as of the earlier of the the date of the filing of the petition and the date on which such lessor repossessed, or the lessee surrendered, the leased property. See 11 U.S.C. 502(b)(6)(A)(i)-(ii). In the Rejection Motion, the Debtor purported to reject the Lease as of the Petition Date. As the Lessor did not repossess, nor did Perkins surrender, the Property as of any earlier date, the earlier of the two dates prescribed by Sections 502(b)(6)(A)(i) and (ii) is the Petition Date.

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([B]ecause I find that it is the logically sounder approach, I concur with the majority view that in calculating damages pursuant to the section 502(b)(6) cap, a landlord must determine 15 percent of the total rents due under the lease, through the expiration date of the lease.); In re Gantos, Inc., 176 B.R. 793, 796 (Bankr. W.D. Mich. 1995) ([T]he Court believes that the natural reading of the statute, as well as congressional intent in its enactment, requires that we follow the majority of the case law and hold that the 15% quantifier is a function of rent, not time.). 43. The Bankruptcy Court for the Southern District of New York has illustrated the

calculation under Section 502(b)(6)(A) of the Bankruptcy Code: To determine the allowable amount of its total rejection damages under 502(b)(6), Landlord first calculated the total rents due under the lease from March 1, 1991, [the Petition Date,] through the end of the lease to be $11,981,428.43. It then determined that 15 percent of that total$1,797,214.26was greater than the rent reserved for one year following Debtors filing$1,608,768.30.15 After determining that the 15 percent did not exceed the rent reserved for three years following filing$4,854,087.02,16 Landlord settled on $1,797,214.26 as the allowable amount of its total rejection damages. We concur, and will allow Landlords claim in that amount. See In re Fin. News Network, Inc., 149 B.R. 348, 351 (Bankr. S.D.N.Y. 1993); see also In re Communicall Cent., Inc., 106 B.R. 540, 544 (Bankr. N.D. Ill. 1989) (In calculating CMCs allowable claim under section 502(b)(6), the maximum amount is to be calculated as follows: the rent for the first year after the petition was filed is based on the sum of $4,000.00 per month for

15

Here, 15% of the Total Rent Reserved Claim amount is greater than the rent reserved under the Lease for one year following the Petition Date. Here, 15% of the Total Rent Reserved Claim amount does not exceed the rent reserved under the Lease for three years following the Petition Date.

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six months plus $4,375.00 per month for six months, which totals $50,250.00. This total is compared with fifteen percent of the remaining rent due under the lease, through the remaining term ending March 31, 1992, which amounts to $39,487.50 (15% of $263,250.00). Pursuant to section 502(b)(6)(A), the claim is to be allowed in an amount equal to the greater of these two figures. Thus, CMCs allowed claim is $50,250.00.). 44. The Lessor calculated his Total Claim accordingly. Specifically, the Lessor first

took his Total Rent Reserved Claim and determined 15% of this amount: $459,975.08. He added to this amount $3,585.67, the Prepetition Arrearage. See 11 U.S.C. 502(b)(6)(B); see also, e.g., In re Smith, 249 B.R. 328, 336 (Bankr. S.D. Ga. 2000) (Thus, claims under 502(b)(6)(B) are allowed if they are actual damages for unpaid rent.). The Total Claim is consistent with the parameters of Section 502(b)(6) of the Bankruptcy Code. 45. Because the Lessor calculated correctly the Total Claim, the Debtors Objection

thereto should be overruled.

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WHEREFORE, the Lessor respectfully requests that this Court enter an order (i) overruling the Objection with respect to the Proof of Claim, (ii) allowing the Lessors Total Claim in the amount of at least $463,560.75, and (iii) granting such other and further relief to the Lessor as is just and proper. Dated: January 6, 2012 Wilmington, Delaware Respectfully submitted, REED SMITH LLP By: /s/ Timothy P. Reiley Richard A. Robinson (No. 5059) Timothy P. Reiley (No. 5435) 1201 Market Street, Suite 1500 Wilmington, DE 19801 Telephone: (302) 778-7500 Facsimile: (302) 778-7575 E-mail: rrobinson@reedsmith.com treiley@reedsmith.com Counsel to Daniel M. Hunter, as Trustee of the Daniel M. Hunter Revocable Trust

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EXHIBIT 1

EXHIBIT 2

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: PERKINS & MARIE CALLENDERS, INC., et al., Debtors. Chapter 11 Case No. 11-11795-KG (Jointly Administered)

CERTIFICATE OF SERVICE I, Timothy P. Reiley, Esquire, hereby certify that on this 6th day of January 2012, I caused a true and correct copy of the RESPONSE OF DANIEL M. HUNTER, AS TRUSTEE OF THE DANIEL M. HUNTER REVOCABLE TRUST, TO REORGANIZED DEBTORS EIGHTH (8TH) OMNIBUS (SUBSTANTIVE) OBJECTION TO CLAIMS PURSUANT TO SECTION 502(b) OF THE BANKRUPTCY CODE, BANKRUPTCY RULES 3003 AND 3007 AND LOCAL RULE 3007-1 to be served upon addresses on the below addressees in the manners indicated: VIA FIRST CLASS MAIL AND E-MAIL IN PDF Mitchel H. Perkiel, Esquire Hollace T. Cohen, Esquire Brett D. Goodman, Esquire TROUTMAN SANDERS LLP The Chrysler Building 405 Lexington Avenue New York, NY 10174 mitchel.perkiel@troutmansanders.com hollace.cohen@troutmansanders.com brett.goodman@troutmansanders.com VIA HAND DELIVERY AND E-MAIL IN PDF Robert S. Brady, Esquire Robert F. Poppiti, Jr., Esquire YOUNG CONAWAY STARGATT & TAYLOR, LLP The Brandywine Building 1000 West Street, 17th Floor Wilmington, DE 19801 rbrady@ycst.com rpoppiti@ycst.com

Dated: January 12, 2012

By:

/s/ Timothy P. Reiley Timothy P. Reiley (No. 5435)

US_ACTIVE-108209402.4-TREILEY